Geothermal electricity powers on

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Geothermal power production could double in the next few years to about 10 per cent of demand - and it will be cheaper than wind power, says Mighty River Power.

State-owned Mighty River's new $300 million, 100-megawatt Kawerau geothermal power station is fully operational. It is next to the Norske Skog pulp and paper mill, a big power user in the region.

Mighty River will consider building another similar-sized plant in the same area, says chief executive Doug Heffernan.

Kawerau, in the eastern Bay of Plenty, is the biggest geothermal development in New Zealand in 20 years. The geothermal field is expected to run for at least 50 years, or as long as anyone wants to keep a power station at the site.

Mighty River said the field had further development potential, but it would find out in the next year or two how it responded to the new plant before deciding on another power station.

Mighty River also has pre-construction work under way at its planned $450 million, 132-megawatt Rotokawa geothermal power station, which is due to be running in 2010. Mr Heffernan said the geothermal business would be significant on a global scale, especially because geothermal plants tended to be near existing electricity transmission lines, unlike remote wind farm sites.

"We see geothermal capacity more than doubling in the next five years or so," he said.

Through to 2015, increased power demand should be met by geothermal plants and more wind.

"More plants are being built than needed, which is a good thing," he said.

The economics on geothermal were "very attractive" compared with other options, but that related to well-known existing steam fields, rather than untested sites.

Rotokawa is just north of Taupo and east of the Wairakei power station, which was the world's second geothermal power plant when commissioned in 1958.

Contact Energy has plans for two geothermal stations near Taupo, costing about $1 billion. The first, Te Mihi, is expected to start producing power in 2011.

Previous government agency estimates suggest only 15 per cent of New Zealand's geothermal potential has been tapped.

Geothermal power could produce about 75 per cent of peak demand.

The Kawerau geothermal field is owned by Maori groups. The land is owned by Norske Skog, which gets a set power price for 10 years.

"The economic benefits for the region, including Maori, are in the millions of dollars," Mr Heffernan said.